Coincheck – one of Japan’s largest digital currency exchanges – pledged to provide a partial refund to the roughly 260,000 users affected by the hack on its platform. Reports vary on the how much NEM, a type of cryptocurrency, the hackers snatched from the exchange, with estimates ranging from $400 million to $530 million.
Japan’s financial regulator, the Financial Services Agency (FSA), on Monday ordered the exchange to improve business operations following the illicit transfer, Coincheck announced in a blog post. The FSA ordered Coincheck to investigate the hack, submit a written report, provide proper support to customers, and strengthen and develop new methods to prevent future hacks. The agency gave the exchange a Feb. 13 deadline to comply. The FSA also sent a notice to the country’s virtual currency firms, warning them of further possible cyberattacks.
The Japanese government has historically placed itself on the cutting edge of innovative regulatory practices when it comes to crypto. Many credit the Japanese Virtual Currency Act (VCA) that was passed in April 2017 with the June crypto boom that brought Ethereum and Bitcoin to unprecedented heights.The VCA, which legitimized BTC and ETH as legal forms of payment, also provided a legal structure for crypto exchanges to gain licensure. So far, 16 exchanges have been licensed through the Act and 15 are operating with their applications pending approval.
The theft could be the biggest cryptocurrency hack on record, possibly bypassing the estimated $400 million bitcoin lost in the 2014 Mt. Gox heist. It comes after leaders at the World Economic Forum in Switzerland last week issued warnings about the dangers of cryptocurrencies and the money being used for illicit activities. U.S.-based platforms for bitcoin and other virtual currencies must comply with anti-money laundering rules, with around 100 such platforms registered with the U.S. Treasury’s Financial Crimes Enforcement Network. The rules require them to file reports on suspicious financial activity.